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Cons

Disruption. It’s hard to imagine that mainframes still are a big part of the world’s computer infrastructure. After all, there are now many cheaper alternatives. But large customers still see the need to keep their old technology. And yes, IBM continues to benefit. But at what point will customers begin to move away from mainframes? It’s tough to tell, but it is something that could happen within the decade or so.

Competition. IBM has staunch rivals such as Oracle (NASDAQ:ORCL), SAP (NYSE:SAP), Microsoft and HP. But the company also must fend off many earlier-stage companies that are using next-generation technologies. Some of these include NetSuite (NYSE:N) and Salesforce.com (NYSE:CRM).

Macroeconomy. In its latest earnings report, IBM did provide some evidence that the world economy is pressuring the results. This especially is the case in Europe, which is dealing with its sovereign debt crisis. Unfortunately, there are now signs that Asia is facing problems as well, which could make it even tougher for IBM to maintain its revenue growth.

Verdict

IBM understands the importance of setting big strategic goals. To this end, the company has a roadmap to reach $20 billion in revenue growth by 2015. How? IBM will continue to focus on acquisitions, which likely will come to about $20 billion. For the most part, the deals will be focused on software. If it all works out, IBM plans to generate $100 billion in free cash flows and will return 70% of it to shareholders.

This is the kind of strategy that should keep the stock moving upward — at least for the long haul. In other words, the pros outweigh the cons on the stock.